Understanding and reacting to process inefficiencies will help institutions compete in today’s postsecondary marketplace while reducing costs for students.

The following interview is with Wayne Smutz, dean of continuing education and extension at UCLA. Smutz presented at the recent UPCEA-ACE Online Leadership and Strategy Conference on change and opportunity in online continuing education. During his presentation, he discussed the importance of institutions developing strong business models to succeed in today’s and tomorrow’s highly competitive postsecondary environment. In this interview, he expands on this topic and shares a few examples of business-minded thinking that can help take a college or a university to the next level.

1. What are some of the hurdles you have seen standing in the way of postsecondary institutions developing successful business models?

Part of the issue is having a history of not really thinking like businesses. The business side and the education side have been separated and the people in the business side have been relatively shielded from academics and faculty. … What we have in many situations is a problem of a lack of business literacy among people who really have to make decisions that involve finance. Deans are more knowledgeable, but department heads and faculty, in general, just don’t understand the business much.

One of the indications is when, internally, a group like continuing education or distance education talks with department heads or faculty; they’re always astounded at the cost of things. It’s like, “Well, how can it cost that much?” That consistent reaction is an indication they really don’t understand how much things cost or the real business that we’re in.

I think this issue of providing more business literacy to the broader group of people in academia is really, really critical and will help us develop more effective business models in the long run. …

One of the [other] things that you learn in the business world … is that one of the key ingredients to success is being focused and not trying to do something for everybody. Of course, that’s what colleges and universities have tried to do; they have tried to be everything to everybody. Being able to focus and make choices as a business is going to be a really tough thing for higher education to do, but they’re not going to be able to develop successful business models unless they do that.

2. You mentioned during your recent UPCEA-ACE presentation that higher education institutions could learn a lot about business practices from experience in public-private partnerships. What are a few lessons you have learned about business practices from your experiences with vendor partners?

If you’re in those partnerships, over time, you get exposed to the way these private industries operate in ways that can inform what you are doing. I’ll give just two examples from partnerships that I’ve been in, in the past.

One of them was about the issue of training the staff. This company in particular … was going to provide some staff who would do some work for us and so they went over with me their training processes that they use to prepare people for their roles. Their training was so much more in-depth and consistent and ongoing than anything that we ever did in the university. I was just stunned by the complex, integrated training system they had to make sure their employees were doing the right thing.

That was one.

Another example had to do with … your company, [Destiny Solutions], in which Shaul [Kuper] and the vice-president Jonathan Tice were talking to me about how they hire employees and the lengthy, detailed process they go through in order to decide if a person is right for their culture or not. It, too, is a much more complex, thorough process than we ever used in the university that decides who we should hire. And, yet, those decisions are absolutely critical.

It’s things like that, the level of detail that private groups pay attention to particular functions of things they’re doing in order to make sure their people do the right things or they get the right people. Those sorts of things have been invaluable to me in starting to try to make some changes in the context I work with.

3. What are a few of the most important business-minded changes higher education institutions must make to succeed in the competitive postsecondary marketplace?

I would focus on a couple of things here. One is that higher education institutions, in my experience, are incredibly process weak. If they have business rules, they aren’t very conscious of what they are or they’ve been in existence so long that they run automatically and they don’t reflect upon them. We’re really, really inefficient as organizations and that’s part of the challenge around cost. We need to keep costs down … and if we got better at process and procedures — best practices even — it would help us a lot.

Often times what happens is the same functions performed in different groups within an organization will be performed in different ways simply because they don’t talk to one another. They don’t think about, “What is the best practice that could be done here?” … Those sorts of things just don’t happen.

In my last year at Penn State, I hired an operations director to come in and begin to map processes for us and to help people begin to think about how they could get better. Just one process they worked on had to do with asking students to request [proctoring for testing;]… not for a final, but for a midterm or something like that. We had to have proctors do these distance and everything. They took a look at this process and they found it took anywhere from two hours to 10 days for somebody to get an exam set up. … They process-mapped it and they figured out that lots of times, people send back the form without it being completed, so there was a lot of back and forth between our offices and the student, the individual.

Based on process mapping and looking at the situation they came up with a solution that … turned the paper form into an electronic form and essentially wouldn’t let people submit it until all of the required … fields were filled out.

Now, a very simple solution that ended up saving lots of time, but it only occurred because they bothered to process map this and figure out what’s going on. And higher education institutions just don’t do that a lot, and I think those kinds of things really help.

The other area I think changes could be made is; I think there’s probably a lot of things that we could automate that we don’t that are handled by people now, routinely. If you find ways to standardize process, then you’re much more likely to be able to automate those processes and have your people focused on the kinds of issues you really need people to attend to, that is, personal interaction with the individual student or groups of students to make them feel a part of the institution and things like that.

4. Is there anything you’d like to add about the importance of a strong business model for institutions to transition to this more competitive phase of higher ed?

There remains strong resistance to the idea that higher education is a business. But we have evolved — rightly or wrongly — into a market-based industry. There’s very little doubt that’s what we have become in higher education. You can work to find ways to go back to a different age, but in the meantime, you have to find ways to function within what is, in reality, a market-based industry, and that means dealing with some of these business issues.

At the same time, often times, business has a very negative connotation in higher education. But if you take the kinds of lack of efficiencies and the way of time and effort that we were talking about a moment ago — in terms of the processes we uncovered that were very inefficient — the main issue is, who’s paying for that? Well, guess what, students are paying for that.

Getting better at the business you are in allows you to reduce the price to customers, in this case, students. So everybody wins.

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Key Takeaways

Higher education leaders tend to be resistant to the fact that they must operate their institutions as businesses to be successful.

One tactic to reducing costs for students is to undergo process mapping to understand inefficiencies in institutional procedures.

Institutions can no longer be all things to all people if they want to succeed in the competitive higher education environment; they need to focus on competitive advantages.

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I never really thought of the importance of hiring practices at HE institutions, especially when we’re talking about non-academic roles.

So much effort goes into hiring professors at every level, but how much thought are we putting into making sure that our administrative staff are up to speed and on-board with the changes being made at the departmental, divisional and institutional level?

I think the first big step we need to take is to clearly define and separate academic (teaching and research) roles and administrative roles.

Smutz hits it right on the nose when he says many higher ed executives don’t think of operating their institutions like businesses. As institutions face more public scrutiny, and pressure from government funders to find cost savings, they’ll need to adopt a new way of thinking. One example that comes to mind is sharing services among departments. Currently, institutional departments tend to operate in silos, which leads to work duplication or higher administrative costs. There needs to be better direction from the top, and a private-sector attitude of wanting to operate at lowest cost (without sacrificing quality), to correct this.

When Smutz talks about what he sees as good staff training in the corporate world, I think he’s referring to the need to develop a customer service mentality. In some ways, higher education staff can be better trained than corporate sector staff, because faculty tend to have doctorate degrees and high-level expertise. But one thing lacking is their ability to see the 21st-century student as more than just a learner, but also a customer. Where corporate staff get it right is their ability to identify client needs and respond to them quickly and effectively. Once higher education staff are trained in this customer service mentality, they will be regarded in a new light, as consummate professionals.